Practicing Organization Development, 5th Edition

CHAPTER TWENTY-ONEManaging Mergers and Acquisitions: Best Practices and New Challenges for OD

Philip H. Mirvis and Mitchell Lee Marks

Mergers and acquisitions (M&A) involve the combination of two organizations. In a merger, two firms of roughly equal size form a new legal entity under one corporate name (e.g., energy providers Exxon + Mobil = ExxonMobil; pharmaceuticals Ciba-Geigy + Sandoz = Novartis). In an acquisition, a larger “parent” company purchases a smaller “subsidiary” (e.g., Amazon buys grocer Whole Foods; Microsoft acquires gamer Activision Blizzard). But not all combinations fit the type: In many mergers, the lead or stronger company dominates decisions and in some cases a small company, often private, effects a “reverse acquisition” and takes over a bigger public firm.

Motivations for M&A buyers include gaining economies of scale, access to new markets, products, talent, and/or supply chains, and creating “synergies” with new partners—all in service of competitive advantages and growth (Piesse et al. 2022). Sellers can be firms whose founders are retiring, entrepreneurs cashing in, or companies that need capital and new markets to grow. Benefits for sellers include resources, synergies with other subsidiaries, and new career paths for employees. Sounds appealing doesn’t it?

But here are the facts: M&A will change the shape, staffing, and strategy of one or both organizations involved. Over the past 40 years we have highlighted how “human factors” (e.g., the “merger ...